Kubota puts Lodi on tractor map
Gaining clout, the Japanese firm sets up distribution center.
By Jim Wasserman -- Bee Staff Writer
Published 2:15 am PDT Wednesday, May 18, 2005
Mirroring the increasing dominance of Japanese automakers in the U.S. economy, a top Japanese tractor maker's growth in the farm sector has brought new muscle to Lodi's industrial district.
Kubota Tractor Co. recently moved its 11-state Western Division to a warehouse on 17 acres the company owns in the San Joaquin County city of 62,000. Kubota credited its expansion from rental space in Stockton to a growing command of the small-and midsize tractor market, which accounts for 90 percent of U.S. sales.
The 180,000 square-foot distribution and assembly center near Highway 99 reflects ambitious plans by Japan's largest tractor maker to penetrate deeper into a U.S. market that increasingly associates its tractors with the same qualities as Japanese cars: fuel efficiency, reduced emissions and dependable engines.
"I have three Kubotas and I had two previous ones," said Placerville-area vineyard owner Larry Walker. "I guess I've had Kubota tractors for 20 years, and I find they are very reliable."
With their distinct orange and gray hues, Kubotas represent 25 percent to 50 percent of sales nationally in the under 100-horsepower category, the company says, mirroring the 25 percent share of the U.S. auto market by the big three Japanese automakers.
"The small-tractor business has doubled in five years, and we continue to hold and grow our share of that," said Greg Embury, Kubota's vice president for U.S. sales and marketing. Minneapolis-based Farm Industry News Senior Editor Wayne Wenzel concurs, estimating Kubota's share of the small-to midsize-tractor market at 40 percent.
Actual tractor sales by brand remain a closely guarded secret in the tractor industry.
Kubota steers its growing North American presence from Torrance 36 years after introducing its first tractor in the United States. While its Japanese colleagues Honda, Toyota and Nissan build cars at U.S. plants, Kubota manufactures tractors in Georgia with 1,600 U.S. workers.
"When we started up, we were the new kid on the block and had to find dealers," said Western Division Manager Rex Young, recalling Kubota's early history in the United States. Then, the unknown diesel import faced off with industry leader John Deere of Moline, Ill., and other stalwarts of American farming: International Harvester, Ford, Allis-Chalmers and Massey-Ferguson.
Now, hundreds of Kubota tractors arrive by ship and truck in Lodi for distribution to 140 equipment dealers from California to Wyoming to Alaska. Tractors for vineyard work, row crops, strawberry fields and orchards stand outdoors with price tags up to $60,000. Inside, smaller tractors for weekend hobby farms fill steel ship cargo boxes awaiting assembly. Tractor tires, steel backhoe buckets, batteries and crates of 15W-40 engine oil reach toward the warehouse ceiling.
Embury said Kubotas sell in much the same price range as competitors, from $2,900 for small-lawn tractors to $60,000 for large row-crop models. Popular 20-to 40-horsepower models sell from $14,000 to $30,000 for use on smaller farms and ranchettes, in construction and landscaping work, for excavation and in local government maintenance fleets. Midsize tractors geared to bigger farms range from $20,000 to $60,000, depending on accessories, such as two-wheel or four-wheel drive and air-conditioned cabs.
Still, some competitors aren't impressed.
At Colusa Tractor Co., a 1968-era John Deere dealer 85 miles north of Lodi, sales representative Alan Nannen said the Japanese haven't cracked its market of rice, tomato and tree crop farmers.
"We still have a 93 percent market share for Colusa County," he said, citing John Deere quality "that has kept people loyal." Nannen, reflecting the hard-fought business of selling 228,000 tractors last year in the United States, called Kubota "an inferior tractor."
But Farm Industry News' Wenzel said Deere and other global tractor giants have underestimated Kubota and misjudged a tractor market that saw large row crop farms shrinking and small hobby farms growing.
Now, much as Japanese car makers leveraged small vehicle niches into footholds to sell larger vehicles, Kubota, too, has begun selling a larger 103-horsepower tractor for row crop farming.
Environmentalists and dealers also credit Kubota for meeting government mandates for clean-burning engines.
"Kubota met California emissions requirements three years before they had to," said Ron Adams, acting president of Sacramento for Tractors, a veteran Kubota dealer. "They were way ahead of the game on that."
In Torrance, Embury acknowledged the frequent comparisons to Japanese cars.
"Like the car business, we dwell on the growth and the quality. Are we doing to John Deere what Toyota did to Ford? I sure am working on it," he said.
While those may be fighting words in Moline and Colusa, Wenzel warned Kubota to watch its back as it marks the grand opening Thursday of its Lodi facility. China's Jimma Co. is gaining ground with a small tractor priced below $10,000, he said. India's Mehindra and the Czech Republic's Zetor are also eyeing the U.S. market.
Either could be "worthy competitors to Kubota if they can establish significant dealer networks in the U.S.," he said.
Picture source: Association of Equipment Manufacturers, Sacramento Bee/Sharon Okada
Kubota Tractor
A subsidiary of Kubota Corp. of Japan, the largest tractor manufacturer in Japan.
WHAT THEY DO
Specialize in making and selling tractors under 100 horsepower.
HEADQUARTERS
Osaka, Japan. U.S. headquarters in Torrance.
MANUFACTURING PLANTS
Japan, Gainesville, Ga.
EMPLOYEES
22,198 worldwide; 2,200 in U.S.
FINANCIALS
Parent company Kubota Corp. had 983.2 billion yen, or $9.2 billion, in sales for year ending March 31, up 5.7
percent. Overseas sales of 345.3 billion yen, or $3.2 billion, were up 20.4 percent - mainly from growth in North American tractor sales.
LATEST DEVELOPMENT
Moved its Western division headquarters from Stockton to a new 180,000-square-foot office and warehouse at 1175 S. Guild Ave. in Lodi. Nearly 60 workers there assemble and distribute tractors and parts to 11 Western states.
Source: Kubota Corp., Kubota Tractor Corp.